U.S. maps out tariff-related direct payments to farmers

Chicago | Reuters — The U.S. Department of Agriculture said on Monday its farm aid package would include US$4.7 billion in direct payments to farmers to help offset losses from retaliatory tariffs on U.S. exports this season.

The bulk of the payments, $3.6 billion, would be made to soybean farmers (all figures US$). That amounts to $1.65 per bushel multiplied by 50 per cent of expected production, Undersecretary for Farm Production and Conservation Bill Northey said on a conference call.

China has traditionally bought about 60 per cent of U.S. soybean exports. But it has been largely out of the market since implementing tariffs on U.S. imports in retaliation for the Trump administration’s tariffs on Chinese goods.

“An announcement about further payments will be made in the coming months if warranted,” Agriculture Secretary Sonny Perdue said.

The aid package, announced at $12 billion in July, will also include payments for sorghum of 86 cents per bushel multiplied by 50 per cent of production, one cent per bushel of corn, 14 cents per bushel of wheat, and six cents per pound of cotton.

Payments for hog farmers will be $8 per pig multiplied by 50 per cent of Aug. 1 production, while dairy farmers will receive 12 cents per hundredweight of production, Northey said.

Sign-up for the program will begin on Sept. 4, to coincide with the 2018 harvest, and end in January. Farmers will need to present production evidence to collect payments and payments are capped at $125,000 per person.

The program will also include $1.2 billion in purchases of commodities, including pork and dairy products, to be spread out over several months, Undersecretary for Marketing and Regulatory Programs Greg Ibach said.

“The specific commodities to be purchased are those that have been impacted by the unfair tariffs that have been imposed by other nations,” he said.

The program will also include some $200 million for a trade promotion program to develop new markets.

The package has been seen as a temporary boost to farmers as the U.S. and China negotiate trade issues. It has divided Republicans, some of whom favour free trade and were troubled by what they viewed as the kind of welfare programs their party has traditionally opposed. It has also faced skepticism from some farmers, a key Trump constituency.

“Short-term aid does not create long-term market stability,” said Doug Schroeder, Illinois Soybean Growers vice-chairman, in a statement after the announcement. “Producers need trade, not aid.”